AML in Argentina

Argentina faces numerous challenges similar to its neighboring countries, including the need to combat illicit money flows from drug trafficking and public corruption. Corruption remains a significant threat to illegal funding, encompassing both domestically generated proceeds and those sourced from Venezuela. The Tri-Border Area (TBA), shared by Argentina, Brazil, and Paraguay, serves as a major gateway for multibillion-dollar Trade-Based Money Laundering (TBML), counterfeiting, drug trafficking, and various other criminal activities. Additionally, numerous money laundering enterprises in the TBA have known or suspected connections to Hizballah, which was designated as a terrorist group in a presidential decree issued in 2019.

Argentina is currently a member of the Financial Action Task Force (FATF) and the “Grupo de Acción Financiera de Sudamérica” (GAFISUD), a FATF-style regional body focused on implementing the 40+9 Recommendations and conducting mutual evaluations of anti-money laundering and counter-terrorist financing systems among its members.

Law No. 25,246, pertaining to Anti-Money Laundering, is one of Argentina’s essential laws in combating money laundering and countering the financing of terrorism.

In April of 2000, Argentina implemented the Anti-Money Laundering Law No. 25,246, which defines money laundering as intensifying an underlying crime after it has occurred. The key provisions of this legislation are as follows:

1. Amending the Penal Code and incorporating “Laundering of Proceeds of Crime” into Chapter XIII, thereby criminalizing actions such as assisting someone in evading authorities’ investigations, hiding or altering evidence of the crime, receiving or concealing proceeds of crime, failing to report a crime, and protecting or assisting the perpetrator in securing the crime’s product or profit.

2. Establishing a functionally independent Financial Information Unit (UIF) within the Ministry of Justice and Human Rights of the Nation (Section 5).

3. Implementing a more stringent regulatory framework for the financial industry and creating a list of individuals and companies obligated to report suspicious activities to the Financial Information Unit (Section 20).

All financial organizations and businesses monitored by the Central Bank, the Securities and Exchange Commission (Comisión Nacional de Valores, CNV), and the National Insurance Superintendence (Superintendencia de Seguros de la Nación, SSN) are required by law to identify customers, maintain records, and report suspicious activities. Institutions must also maintain confidentiality when reporting suspicious activities to the UIF. If the UIF decides to pursue a case further, it will be forwarded to the Attorney General’s Office.

It is important to note the following points:

– A person who commits a crime cannot be separately punished for laundering the proceeds from the offense.
– Money laundering can only be committed by someone who assists the criminal after the fact in concealing the source of the funds.
– Money laundering involves transactions (or a sequence of related transactions) exceeding 50,000 pesos (approximately USD 16,000). Transactions below this threshold may be considered concealment, a minor offense.

Since the enactment of the anti-money laundering law, the UIF has issued several resolutions expanding the list of Argentine Central Bank (BCRA)

Apart from the Financial Information Unit, the Argentine Central Bank (BCRA) plays a significant role in addressing anti-money laundering (AML) and counter-terrorist financing (CFT) issues. Since the implementation of Law 25.246, the BCRA has taken significant measures to strengthen its role as the primary supervisor of the financial sector and ensure effective monitoring of AML/CFT compliance within the banking system.

To centralize evaluations and critical objectives regarding AML/CFT matters, the BCRA’s Board of Directors established the Comité de Control y Prevención de Lavado de Dinero y Financiamiento del Terrorismo (AML/CFT Committee), comprising members of the board.

The BCRA has also regulated AML and CFT obligations for commercial entities in its dual capacity as a significant banking authority and a mandatory reporter of suspicious AML activities to the Financial Information Unit. To ensure compliance, commercial entities are required to perform the following actions:

1. Identify customers.
2. Keep records of transactions.
3. Report suspicious transactions.
4. Develop internal policies and processes.
5. Establish an internal control mechanism to ensure compliance.
6. Form a special committee on AML and CFT, consisting of at least two members of the board of directors.
7. Appoint a senior-level Compliance Officer responsible for ensuring compliance.
8. Conduct testing by an independent party.
9. Provide appropriate personnel development.
10. Implement techniques for detecting high-risk accounts.
11. Establish procedures for determining expected levels of activity.

Argentina has made significant progress in combating and eliminating money laundering and terrorist financing. As a result, it has officially been withdrawn from the Financial Action Task Force’s (FATF) follow-up procedure, which began in 2004 to address weaknesses in Argentina’s AML and CFT system. The country has demonstrated its legal and regulatory capacity to tackle these financial crimes effectively.